ETFs

Creation and the share you buy

Large dealers create and redeem ETF shares against a basket, which is why the share price usually stays near the value of the holdings. In a stressed or closed underlying market, that link can loosen and the price you trade can differ from the stated asset value. A market order in that moment is how people pay the gap.

Tracking is a policy

Some funds hold every security in an index. Some sample. Some hold futures. Some lend securities. The ongoing charge is in the document and is not the whole tracking difference. Securities lending, taxes inside the fund, and the share class — accumulating or distributing — all change what you receive.

Choosing among lookalikes

Two funds with the same index name can differ in domicile, currency hedging, securities-lending policy and tax treatment for a UK, US, Finnish or Australian holder. Domicile is not a detail for a cross-border investor. Read it before you compare the third decimal of the fee.